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Nestle – Market Penetration

Nestle is one of the world’s largest confectionary manufacturers. Although this may at first appear to be a good position to be in, it in fact means that Nestle’s marketing strategy has to be particularly competitive. Thus it must be proactive to external change, formulated and – last but not least – it must support the wider corporate strategy, a critical success factor for large, multinational corporations. This is necessary just to maintain the company’s global competitive position as a market leader, let-a-lone increase sales. Nestle’s latest move to consolidate its position – and compete with Cadbury, McVities and Mars – involves a market penetration strategy using its popular ‘Aero’ chocolate bar.

Market penetration involves trying to boost, or maintain, sales of an existing product to the current market. This often involves minor product tweaks; this strategy, thus, offers minimal risk albeit the pay-off is limited. Hence, this strategy is ideal for large firms with maturing products how need to simply maintain their competitiveness, like Nestle. It should come as no surprise then to see that the Aero chocolate bar has already been modified numerous times – different sizes (targeting different occasional uses), different flavours and even brand extension into hot beverages and ice creams.

The latest ‘enhancement’ to the Aero bar is to extend the brand further; this Easter a new ‘Aero Biscuit’ will be launched. Although this sound like product development, rather than penetrating a current market, it is still a relatively low-risk strategy. This is because the fundamental differentiation strategy used by Nestle to position Aero as a ‘lighter’ and ‘healthier’ chocolate bar remain as part of the actual product – the core and augmented product benefits are also relatively similar to the traditional bar. Hence, Aero Biscuits will contain fewer than 100 calories a pack and continue to target young women by emphasising the brand’s association with bubbles and air, both of which have light-weight and weight-loss connotations.

All of these past strategies must, however, be viewed in the long-term. And by that I mean consider how this fits into Nestle’s wider strategy. Firstly, it maintains sales of Aero by generating new interest in the brand and generate short-term sales. This is called an extension strategy, which aims to prolong the life span of a mature product to prevent a decline in sales – thus, the product can continue to fit in the firm’s wider product portfolio as a Cash Cow. While this appears to be a short-termist tactic, it does actually work in the long-term: variety seeking consumers will notice and try the new Aero variation and then return to become a habitual customer of the original Aero chocolate bar.

Furthermore, market penetration aids Nestle’s competitive strategy. Does hearing of a light-weight chocolate snack with a crispy biscuit centre sound familiar? If so you may be thinking of Maltesers. Not only is the core product fundamentally the same, the actual and augmented features are strikingly similar: they both offer a ‘light’ chocolate snack that appeals fundamentally to women consumers. Moreover, Cadbury’s’ Whisper chocolate bar makes use of the connotations of bubbles to create a very similar offering to Aero. This highlights just how ruthlessly competitive Nestle’s market is; although it is a market leader, it still needs to defend its brands from market challengers.

I appreciate that Nestle’s latest move is nothing out of the ordinary or particularly innovative, but it highlights the fact that the best strategies used by the best firms are those that are tried, tested and proven. Some may call this bureaucratic or inflexible marketing, but I think it is refreshing to hear a company going back to basics. Perhaps more firms need to focus on traditional marketing, as opposed to devoting too much time to social media?

Sumin

Luciane Costa

Josh Thank you for using clear and easy to understand examples. It is so much easier to understand marketing when everyday life occurrences are illustrated . I have an exam tomorrow and I am armed with examples…Please keep posting more !